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ASIC blasts Commonwealth FP on YouTube

ASIC has called for stronger powers to take action against executives and managers in the financial advice industry, amid allegations of further wrongdoing by former CBA-aligned advisers.

In a YouTube video uploaded this morning, ASIC deputy chairman Peter Kell spoke directly to the Australian public about the Commonwealth Financial Planning scandal, pre-empting an ABC TV report scheduled to air this evening.

“Tonight the ABC Four Corners is doing a story on Commonwealth Financial Planning, or CFP, and the conduct of that company’s financial planners six years ago,” Mr Kell said.

“I wanted to tell you what ASIC has done about CFP and the financial planning industry more generally; what CFP did six years ago was simply unacceptable.

“Commonwealth financial planners were giving very poor advice to clients, driven by conflicted commission payments. This was part of a wider problem of unacceptable standards and conflicts of interest right across the financial planning industry that ASIC publicly identified.”

Mr Kell explained that the “severity” of the inappropriate advice provided by some Commonwealth FP advisers led the corporate regulator to take enforcement action, and also took the opportunity to highlight enforcement actions more broadly “against many individuals and firms, large and small”.

The regulator also reiterated calls for “law reforms” that would allow ASIC to take “enforcement action against the executives and managers in the financial planning industry that have done the wrong thing”.

Mr Kell also listed the “three areas” where ASIC “could have done better with CFP”, admitting that “ASIC should have acted faster”, that “ASIC should have been more transparent at the time about the action we were already taking against CFP” and should have “communicated better with the whistleblowers”.

The FPA also issued a statement this morning ahead of the scheduled Four Corners report, explaining that a subject of the report, former Financial Wisdom (CBA) authorised representative Rollo Sherriff was previously expelled from the association’s membership.

“It is on the record that the Financial Planning Association of Australia took disciplinary action against Mr Sherriff as early as 2004. Mr Sherriff’s membership to the FPA was suspended a decade ago,” the statement said.

“In addition to this disciplinary action, Mr Sherriff was terminated as a member of the FPA well over four years ago. Mr Sherriff is listed on the FPA’s consumer website as a banned member in accordance with section 16.1 of the FPA professional constitution.”